By Carjuan Cruz
Investing.com – High-growth, fast-growing technology stocks have been among the hardest hit in 2022 of high volatility, tight liquidity and extraordinary geopolitical events.
And although the market has tried to overcome, with some green days in the last two weeks, for this billionaire investor, there are several factors that hinder an immediate recovery of the sector and that, on the contrary, he predicted that “there is more pain to come ”.
Technology companies will continue to face difficulties and the market will be focused on what can provide immediate profitability and not on what can be very promising, but in the longer term.
“We’ve gotten to the place of enough industry maturity where investors, given all these headwinds they’re seeing now, are saying, ‘I want returns today.’ And that is undergoing an important requalification”, explained in an Insider report, Orlando Bravo CEO of Thoma Bravo, an investment firm specializing in the software and technology services sectors.
The expert indicated that profitable publicly traded software companies have dropped from a peak of 25 times Ebitda to 18 times Ebitda. “Most publicly traded companies in software are not profitable today,” he said.
“Those companies are going to have to answer investors’ question about the path to profitability, and they’re not going to love what they see. It takes a lot of cost cutting. It takes a lot of pain, and this is hard to execute, especially in a public setting,” Bravo said.
He highlighted that unprofitable companies have seen their future income reduced from 17 times to 5 times. A fact that will necessarily affect the price of the shares, according to Bravo. He is in bearish territory, down 31% from his January highs.